Can Barz Pty Ltd & Anor v Commissioner of State Revenue & Ors (No 2); Scott and Bird & Ors v Commissioner of State Revenue (No 2) [2016] QSC 181


This decision serves as a reminder that unreasonably and imprudently rejecting an informal offer of settlement could potentially lead to an order for indemnity costs.

Read on for the rest of the analysis by Petrina Macpherson and Sarah Cahill.


In April 2015, the Commissioner of State Revenue (Commissioner) assessed that the applicants (beneficiaries, custodian and trustees of a self-managed superannuation fund) were liable for more than $2.6M tax (excluding penalty and interest). At the same time, the Commissioner decided that the applicants formed a group for the purpose of the Payroll Tax Act 1971 (Qld), with the effect that each were jointly and severally liable for the tax debt. Two of the applicants applied to be excluded from the group, and the Commissioner rejected that application. The Commissioner issued garnishee notices directing the payment of $250,000 from the sale of a property held by the superannuation fund towards the tax debt.

The court had previously decided two applications by the applicants for the judicial review of the decision refusing to sever the two applicants from the group and an order declaring the garnishee notices invalid. The applicants were unsuccessful in their application for judicial review, and Bond J held that the Commissioner's decision was valid. The applicants were successful in their application for declaratory relief, and Bond J declared the garnishee notices invalid.

The present proceedings related to the costs orders to be made in the above proceedings.

The Commissioner sought costs on a standard basis in the judicial review proceeding, on the basis that costs should follow the event. The applicants contended that there should be no order as to costs in favour of the Commissioner, pursuant to section 49(1)(e) of the Judicial Review Act 1991 (Qld) and on grounds of public interest.

The applicants sought indemnity costs in the garnishee order proceeding as a result of three offers to settle by the applicants being rejected by the Commissioner, either pursuant to rule 360 of the Uniform Civil Procedure Rules 1999 or the common law regarding Calderbank offers.


Bond J held that:

  • the Commissioner pay the applicant's costs of the garnishee order proceeding, but not on an indemnity basis; and
  • the applicants pay the Commissioner's costs of the judicial review proceeding.

With regard to the garnishee order proceeding, Bond J observed that 'it is clear that the imprudent refusal of an informal offer to settle may in appropriate circumstances justify the making of an indemnity costs order'. In rejecting the request for indemnity costs, Bond J took into account that it was not unreasonable or imprudent for the Commissioner to reject the offers made by the applicants, and that to accept such offers would have required the Commissioner's 'virtual complete capitulation'.

With regard to the judicial review proceeding, Bond J rejected the applicants' argument that there was substantial public interest in the judicial review proceeding such that there should be no order as to costs.